ARM Holdings plc Q1 2010 Results ROADSHOW SLIDES 1 ARM Overview ARM is the world’s leading semiconductor IP company . Over 675 processor licenses sold to more than 230 companies . Royalties received on all ARM-based chips . 20 billion ARM based chips shipped to date . GiiGaining mar ktket s hare in long-term secular growth markets . ARM reve nues typ ica ll y gr ow f ast er than overall semiconductor industry revenues 2 ARM Introduction . Global leader in the development of semiconductor IP . R&D outsourcing for semiconductor companies . Innovative business model yields high margins . Upfront license fee – flexible licensing models . Ongoing royalties – typically based on a percentage of chip price . Technology reused across multiple applications . Long-term, secular growth markets Base of over 675 licenses Grows by 60-80 every year More than 230 potential royalty payers 4 bn ARM-based chips in ’09 25% CAGR over last 5 years 3 Key Growth Drivers Growth in mobile applications Growth . Opportunities . Increasing value of ARM technology per device . More chips and higher priced chips Increasing the . Growth beyond mobile ARM value . Increasing ARM penetration into broader per transaction range of digital products Growth in non-mobile applications . Growth into new technology outsourcing . Physical IP, graphics IP and video IP increase Extending IP Outsourcing ARM’s value per device and penetration 4 Processor Licensing Drives Royalties . Licensing base typical grows by 60-80 licenses every year . Internet-connected consumer electronics from smartphones to DTV . Embedded applications such as microcontrollers and hard disk drives . License base yields royalty revenues over long period . LdiLeading sem icon ductor compan ies have ma dlde long-term, strategic commitments to ARM technology . Applicability of ARM technology broadens over time ~275 $250m Significant Royalty Potential Licenses from Recent Licenses +16 $$200m 2006-2009 +87 2001-2005 +61 $150m Pre-2001 +62 >675 ~300 Licenses $100m +61 +71 $50m ~100 Licenses $0m 2005 2006 2007 2008 2009 Q12010 2001 2002 2003 2004 2005 2006 2007 2008 2009 5 Increasing Value and Penetration Mobile Phones Mobile Computers Digital TV & STB PC & Peripherals Microcontrollers ARM processors can be found in Smartphones are evolving into ARM market share ~30% in ARM technology can be found in Microcontroller market is very more than 95% of mobile phones mobile computers brands such as Samsung, Sony many products in the home office large with mainly low-cost chips . 30m unit market in 2009 Bravia and Vizio . Disk drives (65% share) Average of 2.4 ARM based chips . Forecast 500m unit in 2014 . Printers (60%) ARM’s market share ~6% but per mobile phone, with smart- Digital TV becoming more . Networking (20%) such as growing rapidly phones containing 2-5 ARM internet connected, requiring ARM in applications processor broadband router, Wi-Fi, BT based chips web-browers, plug-ins and PC- used to run: and femto cell ARM processors used in: class OS. Driving need for . User interface, operating smarter processor such as ARM . Electric motor controllers Typical smartphone drives six syy,stem, browser and p pglug- As these products become more . Monitors and sensors times more royalty than typical ins, email, gaming capable and more efficient, they “dumb-phone” ST is market leader and recently . Medical applications ARM processors also used in: create more opportunity for ARM announced they are moving to . Industrial robotics . Hard disk drive controller ARM ARM processors used in: . Toys . WiFi, Bluetooth, WiMAX . 2G/3G baseband connection . 2G/3G baseband connection . Applications processor . GPS, Wi-Fi, Bluetooth . Touch screen, camera 252.5 AbfAverage number of Royalty Unit Split ARM based chips 2.4 4,000 per phone Embedded Home 15% 2.0 2.1 3,500 Non-Mobile Enterprise Mobile 6% 1.9 3,000 16% 37% 1.5 1.6 2,500 151.5 2,000 63% 1.0 1.2 6% 1,500 9% Mobile 1,000 0.5 65% 20% 500 0.0 0 2005 2006 2007 2008 2009 Q1-10 2005 2006 2007 2008 2009 6 Extending the Model . Physical IP and multimedia IP markets represent further outsourcing opportunity . Technology complexity increasing, drives cost and risk . ARM develops technology and amortises costs over many licenses . Additional royalty streams per chip Physical IP Multimedia IP . Leading-edge physical IP available . 27 licenses for graphics and video from 250nm to 28nm . 2009 best ever year for licensing . Foundries licensing ARM technology for next generation processes . Added Samsung and Mediatek . Over 30 platforms yielding royalties . 30 million Mali-based chips shipped in 2009 into mobile and consumer . 12 of top 20 semis are driving ARM royalties electronics devices from foundries LG Renoir (Mali graphics processor) LG Xenon (Mali video processor) 7 Strong Balance Sheet and Cash Generation . Healthy margins drive strong cash generation of $86m in FY09 £100m Strong Cash Generation £90m . Net cash of £196m at end Q1 £80m £70m Expect to retain cash rich balance £60m . £50m sheet £40m £30m £20m £10m £0m . £368m returned over 5 years 2005 2006 2007 2008 2009 . £106m via dividend 3.0p Dividend Growth . £262m via buyback 2.5p 2.0p . Progressive dividend policy 1.5p . Grow dividends at least in line with 1.0p . earnings 0.5p 0.0p 2005 2006 2007 2008 2009 8 Summary . ARM business model reduces chip development cost . Turns large fixed cost into smaller variable cost . Yields high margins for ARM . ARM’s technology is needed as growing complexity is increasing cost and risk for chip designers . ARM is gaining share in structural growth markets . Glob al pro liferati on o f the in terne t . Low power in battery-powered products and in consumer electronics . Smart, low-cost devices in everything we use during the day 9 Segments for ARM in 2009 Devices Shipped 2009 Chips/ TAM 2009 2009 2009 (Million of Units) Devices Device Chips ARM Share Smart Phone 230 2-5 1,000 850 85% Feature Phone 600 1-3 1,200 1,000 85% Low End Voice Phone 300 1 300 280 95% Mobile Portable Media Players 180 1-3 250 180 75% Computing (CPU-only*) 30 1 30 <1 1% Digital Camera 100 1-2 150 90 60% Digital TV & Set -Top-Box 300 1-2 370 100 30% Networking 570 1 570 100 20% Printers 120 1 120 70 60% obile MM Hard Disk Drives & SSD 550 1 550 350 65% Automotive 1,200 1 1,200 120 10% Non- Smart Card 3,400 1 3,400 200 6% Microcontrollers 4,500 1 4,500 270 6% Others** 1,300 1 1,300 350 25% Source: ABI, Gartner, Semico, Instat, IDC, Totals 13, 500 15, 000 3, 900 26% andARMd ARM est imates * Applications processor only * * Includes other applications not listed such as headsets, DVD, game consoles, etc 10 Segments for ARM in 2014 Devices Shipped TAM 2009 ‘09 ARM TAM 2014 Chips TAM 2014 Key Growth (Million of Units) Chips Share Devices /unit Chips Areas for ARM Smart Phone 1,000 85% 800 3-5 3,200 Feature Phone 1,200 85% 450 1-3 900 Low End Voice Phone 300 95% 350 1 350 Mobile Portable Media Players 250 75% 200 1-2 300 Computing (CPU-only*) 30 1% 500 1 500 Digital Camera 150 60% 120 1-2 200 Digital TV & Set -Top-Box 370 30% 450 1-4 800 Networking 570 20% 800 1-2 900 Printers 120 60% 200 1 200 obile MM Hard Disk Drives & SSD 550 65% 1,100 1 1,100 Automotive 1,200 10% 2,000 1 2,000 Non- Smart Card 3,400 6% 5,500 1 5,500 Microcontrollers 4,500 6% 9,000 1 9,000 Others** 1,300 25% 3,600 1 3,600 Source: ABI, Gartner, Semico, Instat, IDC, Totals 15, 000 26% 25, 000 29, 000 andARMd ARM est imates * Applications processor only * * Includes other applications not listed such as headsets, DVD, game consoles, etc 11 Broadening the Range ARM Usage Today e Volum OiOpportunity $1-2 $3-6 $10-15 >$25 Average Se llin g Pri ce of a Semi con ductor Chi p 12 Royalties Outperform Industry Q110: ARM Outperforms Industry Q110: 1.4bn units, up ~70% 300 ARM Royalty Revenue 50% Industry units (ex-memory)* up ~17% Industry Growth Rate* ARM Royalty Growth Rate 40% 250 ARM mobile shipments up ~50% ($M) 30% Growth in smartphones and first mobile 200 Growt 20% computer shipments 150 10% h Revenue Rate ARM STB/DTV shipments up >100% 0% Shipments of digital TVs forecast to up ~15% 100 -10% ARM storage shipments up >100% Full Year Royalty 50 -20% End market shipments up ~20% ARM Q1 0 -30% ARM MCU shipments up ~80% 2005 2006 2007 2008 2009 Q110 MCU market up 20% ARM $ Royalty CAGR (05-09) = 12% Industry $ Revenue CAGR (05-09) = flat * Source: SIA April 2010 Offset 1 quarter to align with ARM’s royalty revenue 13 Growing the Licensing Base Cumulative licenses Processor Roadmap in 2010 Estimated Royalty (Q1 2010 licensing shown in parenthesis*) Opportunity for 2014 ARMv7 ElEagle Application Cortex-A Smartphone, mobile computing, DTV Processors 77 (+1) Family and infrastructure 3bn units ARMv6 IitillInitial lea dlid licensees s igne d up per year ARM11TM 36 (+3) Family Heron Real-time Cortex-R ARMv5 Embedded Family Engine management systems, baseband and hard disk drives 10bn units 17 (()+1) ppyer year ARM9TM Initial lead licensees signed up Family ARMv4 Cortex-M ARM7TM FilFamily Cortex-M4 Micro- Family 264 (+2) controllers 60 (+9) Motor control, industrial control, 16bn units 173 (+1) embedded audio per year Mali licenses = 27, Others = 24 IitillInitial lea dlid licensees s igne d up *Note: Number of licenses adjusted for licenses that are no longer expected to generate royalties.